Your home may seem like a money hog: mortgage payments, utilities, and maintenance. But for those who have equity in their homes or the right property, your home may actually be able to save or even make you money.
You may have heard this already, but mortgage rates are currently at an all-time low. If you haven’t refinanced yet or it has been several years, you may want to consider doing it now. You can choose to extend the term of the loan at your current payoff and lower your monthly payments or you can shorten the term and save in interest over the length of the loan and pay your house off sooner.
Buying an Auto
If you are one of the lucky few who qualify for 0%, you may want to rethink it and go with an auto equity loan instead. Let’s say you are purchasing a $20,000 vehicle, and you pay 0% over the course of 36 months, your payments would be $556 per month. However, if you took a cash back incentive of $1,500, paid 2.99% with an auto equity loan, your monthly payments would be $538, saving you $648 over the term of the loan. Plus, you could possibly deduct the interest paid from your taxes (consult your tax advisor).
Credit Card Alternative
With auto repairs, tuition, vacations, weddings, and unexpected needs, it may seem like the only thing to do is to reach for the credit card and just start piling on the purchases. But before you start charging away, even if you have every intention of paying it off quickly, you may want to look into a home equity line of credit. With the current rates, if you aren’t able to pay the bill right away, you won’t be paying as much in interest.
You may be surprised how much having a non-energy efficient home is costing you. And while making the necessary improvements may seem daunting and costly, even just a few small changes can really have an impact on your monthly bills. Consider new windows, replacing old appliances, or even adding solar panels. These improvements can sometimes even provide tax incentives, so check with your tax advisor first.
If you are fortunate enough to live in an area that is attractive to renters (more urban areas), consider utilizing a basement or unused 2nd
floor as a rental unit. This will reduce your monthly mortgage payments and increase the value of your home. Plus, after you’ve refinanced to a new low rate and pay off your mortgage sooner, it will provide income sooner in life (that is if you are comfortable being a landlord).
You’ve heard the term,” you have to spend money to make money,” right? Well, by spending some money to improve your home especially adding to the square footage, you can reap the benefits in equity as well as if you decide to sell. Research the best bang for your buck for remodeling including where you spend the most money i.e. kitchen and bathrooms as well as energy efficiency and additions. You may decide to do the work yourself, but a professional could really help you with plans to get the most out of your space, as well as keep resale as a main priority instead of your tastes, if selling the home is your main goal.